On 10/25/2008 04:40 AM, IanG gave us some additional information.

Even so, it appears there is still some uncertainty as to
interpretation, i.e. some uncertainty as to the requirements
and objectives.

I hereby propose a new scenario.  It is detailed enough to
be amenable to formal analysis.  The hope is that it will
satisfy the requirements and objectives ... or at least
promote a more precise discussion thereof.

We start with a group comprising N members (machines or 
persons).  Each of them, on demand, puts out a 160 bit 
word, called a "member" word.  We wish to combine these 
to form a single word, the "group" word, also 160 bits 
in length.

We must find a combining function.  The primary objective
is to maximize the entropy of the group word.  A secondary
objective is computational simplicity.

The members can be categorized as follows:
 a) Some of them are abjectly broken.  Their outputs have
  zero entropy density.  Constant outputs and/or predictable
  outputs fall into this category.
 b) Some of them are malicious.  Their outputs may appear
  random, but are in fact predictable by our adversary.
 c) M of them have an entropy density greater than XX.
  As a concrete example, we consider the case where XX=50%, 
  i.e. 80 bits of entropy in a 160 bit word.
 d) Some of them could contain a high entropy density,
  very close to 100%.  For our example, we assume there
  are none of these;  otherwise the problem would be
  too easy.

If we do things properly, case (b) is no worse than case
(a), for reasons that will become apparent shortly, so
we can lump these cases together.

We don't know which generator falls into which category.
All we need to know is that M of the generators are
putting out useful entropy.

I recommend the following combining function:  concatenate
all N of the member words, and then feed that through a
hash function to produce the group word.  Since SHA-1 is
efficient and has a 160 bit output word, it will serve 
nicely in our example.

In the sub-case where M=1, the recommended hash-based
procedure produces a group word with 80 bits of entropy, 
i.e. a 50% entropy density, which is the best we can 
do.  In this sub-case, SHA-1 is no better than XOR.

As M increases, the entropy density of the output word
converges rather rapidly to 100%.  This is subject to
mild assumptions about the hash function actually working
as a hash function, i.e. not being grossly broken.

When M is greater than 1, the hash function approach
is much better than the XOR approach.  Here is an
easy proof:  Consider the case where each member in
category (c) puts out a 160 bit word consisting of 80 
totally random bits in the left half and 80 constant
bits in the right half.  XORing these together only
gets you to 80 bits of entropy in the group word,
whereas hashing is better by a factor of 2.  Actually
(2 minus epsilon) if you want to be fussy about it.

In the case where the entropy is evenly distributed
within the member word, i.e. 160 bits each with a 50%
entropy density, the result is more subtle:  The group
word will converge to 100% entropy density, but the
hash version converges _faster_ than the XOR version.
Here "faster" means you can get by with a smaller M.
Considerably smaller.  Also (!) beware that to get XOR 
to converge at all, this paragraph depends on some 
properties of the members that may be hard to realize 
in practice ... whereas the hash approach has no
such dependence.


To summarize:  In the special sub-case where M=1, XOR
is as good as it gets.  In all other cases I can think
of, the hash approach is much better.

My analysis applies to a specific set of requirements.
If somebody wants to discuss other requirements, please
be specific about what the requirements are.  There
are innumerable creeping features that we could discuss.

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